Energy Commodities: 01/03/10

Unless stated otherwise, all prices are for the close of February 26.

Brent crude oil futures: US$78.35/bbl, up 1.0 per cent, as of GMT 9:00, March 1

WTI crude oil futures: US$80.49/bbl, up 1.0 per cent, as of GMT 9:00, March 1

German power: €47.50/MWh, up 0.11 per cent

Coal: €94.50/t, up 0.53 per cent

Natural gas: GB 32.45p/therm, down 1.37 per cent

EUAs for December 2010 delivery: €13.00/t, up 0.78 per cent

CERs for December 2010 delivery: €11.54/t, up 1.41 per cent

Latest buzz

Oil futures appear to be on their way up, courtesy of strong US personal consumption and payroll data released on February 26. The same day recorded a 1.9 per cent rise in the value of NYMEX crude. Other factors are continuing to give oil bulls momentum, such as a weaker US dollar and threatening comments from the deputy commander of Iran’s Islamic Revolutionary Guard who was quoted on February 28 as saying that Iran sits “on 50 per cent of the world’s energy” and that if Iran decides to shut off its natural gas and oil supplies, “Europe will be living the winter in the cold.”

However, analysts have warned that there is little remaining “upside” to the market, with oil unlikely to rise further on the back of non-technical factors, given the high levels of oil inventories at present.

One interesting development that could have significant implications for the oil market, is a recent promise made by Saudi Arabia to almost double its crude oil exports to India. India currently imports 25.5Mta of crude from the kingdom and the new agreement would see this rise to 40Mta. The higher volume will be needed, given that three large refineries in India (at Bhatinda, Bina and Paradip) will soon be starting operations. The two countries have also promised to work more closely in oil E&P projects.

Friday was good for the carbon markets as fears that companies might sell off their newly-allocated 2010 EUAs once again failed to materialise. In fact the market was given a welcome boost, thanks to greater interest in longer-dated contracts, suggesting that companies are looking to hedge their exposure to carbon emissions further into the future. The generally positive energy complex also helped boost market sentiment. Surprisingly, CERs outperformed EUAs, in the absence of any clear bullish factors.